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The business world is full of titles, duties and responsibilities, rules, and formalities . To be financially literate, it is important to understand these things because it helps you navigate the world of commerce, wealth building, and your future career. Communicating Objectives At the conclusion of this lesson, you will be able to explain the advantages of joining together as a corporation to develop and market a product. You will be able to compare the roles of officers and directors of a corporation, and name four common types of business entities. You will translate parliamentary procedure language and explore whether you have what it takes to be a successful CEO. Presentation of Content Let’s say your innovation team has been meeting in your garage or dorm room every day working on R&D. You all agree that things are going pretty well. Your team anticipates a long and successful relationship designing, building, and marketing a profitable product. Right now, however, you are really just a bunch of people working on a project, united in your quest for success. You have no formal business arrangement. You have not agreed on who is responsible for management, how bills will be paid, or how team members will be compensated. You all agree that you need to branch out, rent office and research space, buy some much-needed supplies, and hire more people. The problem is, no one team member is willing or able to pay for all of it. No member has the authority to sign contracts on behalf of the group or manage the many other aspects of a business. Financial debts and obligations of a business are called liabilities. Taking on responsibily for the liabilities of a startup company is a big risk! Q: How can your group move forward with the project, with clearly defined roles and responsibilities, yet without members having to assume personal responsibility for the liabilities of the project? A: Form a corporation! The Benefits of Forming a Corporation Your team explores various types of business entities, and decides they will join together to form a separate and distinct legal entity called a corporation. A corporation offers many key advantages including: 1. clarifying the roles and responsibilities of the owners. 2. limiting personal liability of the owners. 3. enabling growth of the business. SLIDE 12G SLIDE 12H PRODUCT PREVIEW
221 THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
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